Townhall Meeting - IMF Managing Director Horst Köhler and World Bank President James Wolfensohn with Civil Society Representatives Participating in the International Conference on Poverty Reduction Strategies

January 17, 2002

Townhall Meeting
IMF Managing Director Horst Köhler and World Bank President James Wolfensohn
with Civil Society Representatives Participating in the International Conference on Poverty Reduction Strategies

Moderated by Warren Nyamugasira, Uganda National NGO Forum
Thursday, January 17, 2002
Washington, D.C.

Townhall Meeting with Civil Society Representatives
Townhall Meeting with Civil Society Representatives

Mr. Nyamugasira: This is the room where civil society organizations have been meeting in the past few days, and we can call our own. Symbolically it's very important that you're coming to meet us at such a venue and also without a pre-set agenda.

We have here a cross-section of representatives of civil society, both from the South, as we call it, and our colleagues from the North.

We know we're coming from a time when the two organizations that you represent have had a crisis of legitimacy, as we see it, from civil society. We are hearing that PRSPs are creating an historical opportunity to make a change, and we will be looking extremely critically and very closely to see how this change plays out not only here in Washington, but back in our countries. When missions come from here to our countries, we will be looking very closely to see how that change is taking place.

We will also be looking to see how your policy advice to our countries is going to produce the kind of changes, how things are going to be done differently, how actually growth is going to be produced, which will be equitably distributed so that it translates into poverty reduction, and therefore seeing how much poverty is really going to the center of the way that you do business and the policies that you give/advise our countries to pursue.

From left to right: IMF Managing Director Horst Köhler,
Warren Nyamugasira, Uganda National NGO Forum and World Bank President
Jim Wolfensohn
Horst Köhler, Warren Nyamugasira and Jim Wolfensohn

The way we are going to move forward is we'll ask each of you, starting with Mr. Köhler, to make brief remarks, also indicating some of the things on which you may want us to focus, followed by Mr. Wolfensohn, and then we'll open it to the floor. There are people that have already organized some questions around the issues that we have identified, and then we'll take it over from there.

At intervals, we'll get back to you and ask both of you, either of you, to make a response.

From left to right: Horst Köhler,
Kathy Selvaggio, Hugo Fernandez Araoz
Mr. Köhler meets Ms. Selvaggio and Mr. Fernandez Araoz.

Mr. Köhler: Thank you, Mr. Chairman. I welcome the opportunity to meet with you. I am available for your questions. This meeting comes at the end of a three-and-a-half day conference about PRSPs that should have demonstrated that the IMF is committed to work with development partners to make this concept, this approach a success. I should also tell you that my institution has 183 members. I feel myself obliged to these members and to serve their interests.

I have made clear publicly that I do think that to fight against poverty is the number one issue and task in this 21st century.

Growth is important. It's not everything, but without growth, we have nothing. Growth, in my view, depends, first and foremost, on the policy in the countries themselves. I think we should be aware that the main responsibility for future, the destiny of any nation, lies with the nations themselves. We should discuss if you have doubts about that. But, having said this, the international community must make faster, deeper efforts to support the countries themselves. The IMF is also prepared to listen to you on how we can make a better job. I will try to answer your questions as good as I can, and I hope that we can get some further information how we improve our business.

Mr. Nyamugasira: Thank you.

From left to right: Warren Nyamugasira, Jim Wolfensohn, Carolyn Reynolds
Mr. Wolfensohn greets Mr. Nyamagusira.

Mr. Wolfensohn: I want to welcome you to the IMF, also, and say very simply that I am very happy that we've had these last three and a half days. I think I've already said that we are committed and have been committed to working with you. I think the best thing I can do is to let you ask questions and get into the issues that you want to ask. Thank you.

Mr. Nyamugasira: Okay. Shall we take the first question?

Question: Mr. Hugo Fernandez Araoz (UNITAS, Bolivia): [Translated from Spanish.]

There is one point which has been of concern to us throughout this process, which was to what extent the topic of the macroeconomic framework within the poverty reduction strategies could actually be called into question. On the basis of the review and the analysis conducted through these days, it would seem that the macroeconomic framework could, indeed, be questioned or challenged, but it's not absolutely untouchable and that it could be reopened. But we would like to have a clear response from the heads of both the IMF and the World Bank whether this reading that we have derived from these last few days is correct; namely, can the macroeconomic framework be put into question and discussed within the framework of each country?

With regard to the PRGF, we would like to know whether this can be made public, firstly; and, secondly, can it be made available for discussion and questioning, as was the case for the PRSP so far. Now is this the way that we should construe the situation? Is this possible? And if the reply is in the affirmative, then I would like to be able to say, well, I have put this question to the heads of the IMF and the World Bank, and they have replied, yes, these are open for discussion. Thank you.

Mr. Nyamugasira: We would like to take a second question.

Question: Mr. Rick Rowden (Results, U.S.A.) I wanted to address the issue of trade, but more broadly just to reaffirm what Warren [Nyamugasira] had mentioned about the crisis of legitimacy. I'm sure I don't need to remind you that before the tragedy of September 11th, the Washington Post was predicting up to 100,000 protestors outside the annual meetings. I would just like to assert that I don't think those protests will die down or go away any time soon and that they continue to exist for a reason.

I think one of the biggest concerns going out of the PRSP review that I don't think was adequately addressed was a great deal of disillusionment that exists out there among the NGO communities, from Nicaragua to Uganda to Cambodia, with the continuation of structural adjustment policies and the final products. The PRSC for Uganda, the PRGF for Uganda, they don't show any divergence away from these traditional issues.

The one issue I'd like to speak to is the rapid trade liberalization. The SAPRIN study showed that rapid trade liberalization was very devastating to small- and medium-size enterprises, and many other countries have shown this to be the case, also, over the last 20 years of these policies.

What I would like to ask you is that the World Bank and the IMF have done a very good job in the last few years of drawing attention to the imbalance in North-South relations, with the rich countries retaining their high trade barriers and subsidies, and what I would like to ask Mr. Wolfensohn and Mr. Köhler: would you go on the record saying, since the situation is so terribly imbalanced, do you think it would be acceptable for poor countries, such as Uganda, to retain a certain degree of trade protection and subsidy support, at least over the short term?

Mr. Köhler: I start with the first question. I'm not so sure that I understood it fully, but I'll try to answer as I understood it.

First, the macroeconomic framework is discussed with the country and it's not a prescription or dictate from Washington. It has to be discussed with the authorities, with the NGOs, if there is an organized discussion in this context. This is the first point. We do not have a one-size-fits-all approach. That is not right. We are trying to look at what are the conditions in each case. This is the first remark.

The second remark is that macroeconomic framework means that, at least in the medium to long term, things have to add up. The experience is, if you have inflation rates of 10, 20 or even more percent, that's devastating for the people, particularly for the poor people, because inflation is bad for the poor, and it's the same with the budget. You can finance with deficits, maybe for a couple of years, but you can't run an economy, a society, a country permanently with deficits. And there is evidence enough that if you run a country with sound macroeconomics, a sound budget, low inflation, then it pays off in better growth.

Therefore, I would say that we should not put in doubt this basic principle that sound macroeconomics is good for growth, and growth, again, may not be everything, but is needed to fight poverty.

I don't know whether I really answered your question because you said now we understood, we can put into question the macroeconomic framework. I hope that I answered your question because no country, at least it would be my advice, should run an economy or a society with permanent deficits or foreign debt. I think it goes beyond economics.

Someone may ask me about Argentina and all of this, and this is certainly a very, very difficult situation, and no one is free of having made mistakes, but one thing is also clear, if you are living for years, and even decades beyond your means, it backfires. I have no quick fix to give you a better answer. This is this old housekeeping principle. At the end, you can only spend what you have as income.

And in a particular situation of a poor country, you can request, and you should, support from outside. But I think it is also important, say, that a culture emerges where every country, poor countries, in particular, never lose their pride, never lose, as I see it, their identity, their national pride. And I am concerned if aid dependency has not been seen as a problem, then at the end the poor countries will also pay the price with losing their pride.

I think we should be fully aware that, at the end, the stability of a society really also depends on the fact that this society knows it has to live within its means or it has to develop its means or its resources to do more or to spend more. That is what I would like to say to the first question.

In the second question there have been two elements—the critical globalization discussion, the protests, and the question of trade liberalization.

To the first question, I must tell you I hope that the globalization discussion, the critical, the pros and cons about globalization are going to be revitalized. September 11th was a shock. It subdued the debate, but, in my view, should not subdue it forever because globalization didn't work for all. And there is now clarity, I think, that if, at the end, it doesn't give a prospect to work for all, it will backfire on the wealthy.

Therefore, my message to my shareholders in advanced countries is: you should realize that we need the concept, a political concept, for globalization, that we need to shape globalization on this basis to give all countries on this globe a chance to participate in prosperity. In order to participate, I still feel that integration or trade exchange—not just trade, but exchange of ideas, communications, press, capitals—is part of a good process to catch up with prosperity or, in the first stage, to get out of poverty.

I don't want to be misleading. I, too, think in the long run, openness is good for the countries. But we have learned from the Asian crisis that, indeed, the opening of a country can be too fast, too rapid, because the internal structures are not yet ripe, mature to cope with all of this capital. In Asia, they had neither banks nor regulatory supervisory frameworks which had been able to cope with the situation. And at the end, in combination with a fixed exchange rate, it ended in a disaster.

So, coming from this experience from capital markets, the Fund has already drawn the conclusion that we need to pursue a policy advice which gives advice for opening capital accounts in a sequenced manner. Take yourself time, depending on the development of regulatory and supervisory framework.

Trade liberalization. To be honest, I am discussing it with my own staff who is telling me that even if this rapid liberalization is a kind of shock, the poor countries should do it in order to adjust to competition and to the global economy.

I am not so convinced that this "even if" at the end is still a valid conclusion. I think that even regarding trade liberalization, nations have a right to think of their best way, at least if they want to have ownership. My advice is nevertheless to be ambitious with trade liberalization because, first, if you don't liberalize, often the poor can't get access to cheaper consumer products, and they have to pay a bigger price.

And the second point is more, if you want, a technical point, also. The biggest problem of trade is the complacency in advanced countries, not only with protection, but particularly with subsidies. I would encourage the poor countries to build up credibility in their own policy and then to be even more forceful regarding their requests to the advanced countries that they have to open up. Because if are slower, the advanced countries will like it because this gives them the feeling, if they don't speed up, why should we?

That is a bit of a technical advice from a person who has a lot of experience in these businesses. I would say the country should decide itself.

I am in favor of being ambitious with opening up, but don't do it without having prepared your internal structures. And I agree with you that opening up an economy without paying attention to existing small- and medium-sized business is, of course, a big risk, and therefore there should not only be safety nets, but also a policy concept which takes care of financing for start-ups, small businesses. We discussed with Jim Wolfensohn, when we were in Africa, that's part of our advice. I don't know whether I have given you a totally convincing answer. My answer is: if there is a doubt, I am in favor of trade liberalization, but I am not advising this as the only recipe, and it should be discussed very carefully.

Mr. Nyamugasira: Thank you very much. Let's hear from Mr. Wolfensohn.

Mr. Wolfensohn: Let me try and respond quickly, not because I wouldn't like at length to debate both issues, but I am sure there are other questions.

Very brief points. On the structural adjustment, when I first came to the Bank and traveled, structural adjustment was mentioned in virtually every country. In recent years, it's not mentioned, and it's not mentioned because I think the approach that we're seeking to take is one where structural reform is, in fact, negotiated and agreed with the countries.

The countries are, in fact, keen to establish a framework, and I don't think you want to have macroeconomic policy without some form of framework. The question is how vigorous are we in imposing something that the country doesn't want? But the country needs a structural framework, and I think that there's been a huge move in the last 5 years [by the Bank and the Fund] to act less as a policeman and more as a counsel.

In some countries, I think they would argue that you're more a policeman than you are a councilman. But I would say that the position which is being taken by both the Fund and the Bank at the moment is moving much more to assisting the countries develop the framework, as we tried to do in the PRSPs, where the economic, and social and even cultural aspects all come together, in terms of the advice we're giving a country. That will come through in the results, rather than in the phrase of the structural reform, but I believe it's happening.

I'd like to say something on the crisis of legitimacy. There can be 100,000 people in the street; that may or may not be reflective of whether we're legitimate or not legitimate. I think we can listen very carefully to the issues. Some of them I think are sound. Some of them I think are less sound. But I think all of us recognize that on the question of globalization, at least we recognize or believe that we can't turn back globalization.

Globalization of terror appeared on September the 11th, but before that, globalization of finance, of trade, of health, of migration, of crime, of drugs was already with us. You're not going to turn back. The question is how do you adjust to globalization, and that gets you into the second question of trade, as it gets you into the question of capital markets' flexibility.

I would agree with Horst. I don't think it is one-size-fits-all. I think, again, you're finding a much greater softening of the approach on the part of the institutions to try and recognize both the balance and the inequities. I would agree with Horst very much that every study which we have done says that if you opt out of the international system, growth is less, but the pacing of that becomes very important.

The thing which you gave some little credit to is that Horst and I, for the last several years, have been saying the balance is not right. You cannot expect a poor country to open its markets, when the rich countries do not. You cannot expect $300 billion in agricultural subsidies in the developed countries and $50 billion in total overseas development assistance to the developing countries to be a match. It doesn't work.

So I think, in a way, we don't differ with you, and, in fact, to an extent, we're your biggest advocates on the issue of trade. I don't expect to convince you in 3 minutes, but it is what I think.

Mr. Köhler: Could I add, it sounds a bit challenging to the NGOs. I am still not satisfied that the Northern NGOs are focusing enough on trade issues and official development aid because it touches on privileges in the advanced countries.

If you talk to trade unions in the Western world, they have all of these arguments that globalization is bad, and so on, but they fight for their own income. They don't care so much about the poor in the South. So I accept any critical question on this [issue of] trade and globalization. But I think if you want really to fight poverty and base it on self-help, you should fight more the privileges and the selfishness in the advanced countries.

Mr. Nyamugasira: Well, let's take a question from a representative of the trade unions of Ghana.

Question: Mr. Anthony Yaw Baah (Trade Union Congress, Ghana): My question borders, generally, on human rights, and I will narrow it down to labor rights because I work for trade unions. In Mr. Köhler's remarks, he said development lies in the hands of the nations, and that is true, perfectly true. But at the same time, he also knew that IMF and the World Bank have significant influence in our countries, in poor countries, in Africa and elsewhere.

My first question is, and I'm asking this against the background of the new sense of partnership we are developing. What is it that IMF and the World Bank are going to do to help promote human rights, generally, so that quality of life in our countries will be improved? Let me narrow it down to the specifics, which is labor rights.

We know that we are talking about poverty for the past 3 days. And one asset that the poor has is labor, their labor. So it means that in order to reduce poverty, we may need to have some kind of standards, labor standards, I mean; minimum wage and other standards like collective bargaining, for instance.

What are we going to do as partners to ensure that these rights are always at the forefront or become part of the poverty reduction agenda in our country and what role is the World Bank and the IMF going to play to ensure this? Thank you.

Mr. Nyamugasira: Shall we take another question? The lady over here has been putting up her hand.

Question: Melissa Moye (World Wildlife Fund): The World Wildlife Fund works in probably I would say the majority of HIPC countries in Africa, and I think we've seen quite a few countries in which the environment has been marginalized in poverty reduction strategy papers. And by that I mean that if you look at quite a few of them, and you look at what's happened with budgetary expenditures associated with those programs, quite often there is practically nothing for the environment, despite the fact that it's considered one of the cross-cutting issues that should be considered.

And I think that what concerns us most is that since poverty reduction strategies are envisaged not only just for debt relief, but also for the whole donor framework, that there's a risk that not only could environment not be included, but that it could lose what little it has.

There's been a lot of discussion about public expenditure management at this conference, and I think one of the things that we typically see relative to environmental ministries is that if they have a budget, they don't get it and that they rely on typically NGO or donor assistance because, in the countries we work, we operate both as a donor and an NGO, and we work with local NGOs.

And the problem, I think, the reason that you see this phenomenon of the environment being left out is because the environment ministries typically don't have the capacity to analyze the sort of poverty environment link, and quite often there isn't enough civil society involvement. My question is, basically, what is the World Bank and the IMF doing to help countries to build capacity, both for civil society and for environmental ministries and to make sure that they're not marginalized in the debate over poverty reduction strategies?

Mr. Wolfensohn: Let me try and give brief answers, but there obviously could be very long answers.

On the question of human rights, everything that we're doing at the Bank in relation to poverty is an attempt to protect human rights. The issue of poverty is an issue of human rights. The issue of women is an issue of human rights. The approach that we're taking within the poverty reduction strategy papers is to start with legal and judicial reform which protects rights, and this is a key starting point. If you don't have a proper legal and judicial framework, you cannot protect the rights of poor people.

If you have undue governance and corruption, you cannot protect the rights of poor people. You only need to look at your continent to see that what's written down, in terms of protection and constitutions, not just in Africa, but anywhere, cannot be carried through unless you have structural reform. So I just want to say that, generally, this is central to what we're doing.

With the trade unions, we have come a tremendous way closer. We now meet with trade unions everywhere. There are four issues of trade unions, in terms of slavery, child labor, [equal opportunity/anti-discrimination] and collective bargaining. [Note: At a February 4 meeting with 40 international labor leaders in New York, Mr. Wolfensohn clarified that at the January 17 meeting with NGOs he had misstated the ILO's position on the issue of collective bargaining; he affirmed to the labor leaders that the ILO unambiguously endorses the right to collective bargaining. He also stated that the Bank supports the promotion of all four core labor standards, but the institution does not apply conditionality on these standards in its lending due to lack of consensus among the Bank's shareholders.]

We are pushing, wherever we can, within the framework of the collective bargaining issue, but many of the poorest member countries are concerned—within their own government frameworks, as you well know, since you're a trade union leader in Africa—and are not prepared to make that go full hog or to push that to the end.

I just met a few months ago with John Sweeney on the subject, and we're in regular contact with the international labor union movements to try and see what we can do to bridge that gap. But I really believe that, while we don't call it a rights-based approach, which Mrs. Robinson would like us to do, on each issue we are, in fact, addressing the questions which Mrs. Robinson is addressing.

I don't want to move to a rights-based approach because I think I'm stronger in what I'm doing, but we will continue the discussion with Mrs. Robinson on whether it should be, and we will continue the discussions with the labor movement also.

On environment, I can only say that I agree with you; that the issue of the strength of environment ministers and the strengths of environmental NGOs and their leverage in-country is diminishing where there is economic pressure. What we can do at the Bank is to keep pushing, keep advancing the work that we're doing with GEF [Global Environment Facility] and the Bank itself. We're now up to $10 billion of lending in environment, where 10 years ago it was less than $1 billion.

We're trying to, as we said this morning on gender, make gender essential and integrated. The same is true of what we're now trying to do on environment and have been for a number of years. But there is a weakness in many countries on the issue of environment. The biggest victory that we've had recently is in China. China had, for a period of time, not given due weight to environment until it got very clear that it was a strong economic issue. Together with you, and with others, we've now made a major change.

I think that we're on the move in the environment, but I'm, by no means, ready to declare victory. I think it is a serious issue, and I have no immediate answer, other than to say we have it front and center in our agenda.

Mr. Nyamugasira: Okay. We have a couple of more questions I think in the time that we have available.

Question: Kathy Selvaggio (Catholic Relief Services): I'm just going to raise a very specific question around participation, but I would like to raise a couple of comments first.

In some way, I think we might all be a little tired of the word "participation," even those civil society organizations among us. To a certain extent, that might be because I think we have seen, and we are very glad to see a broader acceptance of the concept of participation, and to a certain extent, the practice in the field with the PRSPs, and we're encouraged by that.

I want to make two brief comments, though, in response to things that have arisen in this conference, and then make a specific request.

One is that I want to reiterate that civil society participation need not come at the expense of formal representative democratic institutions. They are not mutually exclusive. We see the need for both.

The second is just somewhat in response to the very first question around the macroeconomic framework. I think the main issue there is not whether there needs to be one and not even the negotiation between governments and the institutions, but the need for a much broader discussion and open discussion in the countries around that framework, and the IMF and the World Bank do have a specific role they can play. They can promote more openness and transparency and participation around the PRGF and PRSCs.

However, as I think Mr. Page or Mr. Masood Ahmed noted earlier today, the question really always has become "participation for what?" And civil society does want to—so that they don't get burned out or discouraged, that their participation is not having a direct influence, we have been calling for ways to ensure that their input is being acknowledged and responded to in various levels of the PRSP.

I want to extend that request to the comprehensive review itself and ask you if you will agree to release a draft of the review report that you will submit to the Boards before the spring meeting, invite comment and allow that comment and response to the comment to go to the Board as well.

Mr. Nyamugasira: Mr. Buston ?

Question: Oliver Buston (OXFAM): Firstly, just a quick reassurance to Mr. Köhler that certainly we will be responding to your challenge that we should challenge rich countries on their trade policies, and we support your leadership and Mr. Wolfensohn's leadership in this area.

My main point sort of relates to this issue of the fact we need a better understanding of how macro and structural policies affect poverty and growth, and this is an area that there's been a reasonable degree of consensus on over the last few days.

As Mr. Page and Mr. Ahmed said in their speeches earlier today, there's no one answer. So we need to generate a wider range of policy options and evaluate trade-offs at the country level, and this would hopefully underpin a richer debate at the national level on what economic policies are appropriate for the poverty reduction.

We're also pleased by the fact that there's been a lot of discussion over the last few days about this issue of poverty and social impact assessment. And in the longer term, I think this work should probably take place at a country level, with governments bringing in universities, the World Bank, the IMF, NGOs and so on.

But in the short term, we feel that the Bank and the Fund have some responsibility to analyze the impact on poverty and the environment of key reforms within the PRGFs and within the PRSCs and other lending instruments and to do this upstream and to get it out into the public domain.

Certainly, two Development Committee meetings have focused on this issue and mandated the Bank and the Fund to take it forward, and there's been some progress within the IMF. Some PRGFs have included this sort of poverty and social impact analysis. Similarly, the Bank is developing tool kits, and there are some pilots, I believe, in a number of countries. We feel that progress is really a bit slow in this area.

I think we shouldn't really look for a perfect analysis. We should be out just looking to ask the right questions in countries and to use what analysis is available, whilst we are, at the same time, developing appropriate methodologies for the longer term.

So my question, finally, is whether the PRSP review will include an expectation that this work will take place for all future PRGFs and PRSCs. Thanks.

Mr. Köhler: The review of the PRSP process: should we go public before we finalize the documents for the Board. I must tell you I have no objection in principle against that. We did it at the Fund, with our papers on conditionality. We put it on the website, got responses, tried to take it into account and present it to our public. But I make you aware of the time constraint because the time schedule was planned that we have it in the Board timely enough that we have at least an outcome out of this Board discussion for the Monterrey Conference.

So that is a very practical point, and maybe comments which come in later or not timely enough for this timetable are, of course, not lost. Trust us a bit, trust Jim Wolfensohn and me a bit. We never will be able to satisfy you totally, but we try.

The second question, macroeconomic structure policy, how they affect growth. I learned, indeed, and I share this view, that there is not just one answer always. There are different answers possible, therefore I am open to policy options or for a choice for the governments or the societies what they want to pursue.

But I have a caveat in this context. If you take a choice, as a government or a society, to go one way, you can't possibly have both, a total preservation of everything that is national and at the same time rapid growth or access to technology from the world. This is particularly true regarding the budgets.

I hope that this poverty reduction strategy process also is a process where countries build up capacity how to govern, how to run the country, based in principle on democratic elections and so on with participation of the NGOs. But to govern means— [brief interruption in tape recording] Often, we all want the good things. The governments and the authorities in the poor countries want the good things, but they don't know how to separate first things first and then the second. And this budgetary constraint is in a way, also, educating the need to face reality, and this is to take choices.

Mr. Wolfensohn: Two quick points. I, also, am in favor of more disclosure. We've actually brought about a lot more disclosure in the last several years. It's not for me to just sign off. I have to get the Board to approve it. I think that we're moving to a point where Board documents will, at some moment, be made more available, but the inhibition is that the country and the government of the country feels it owns those documents, and it is their documents.

So I think that we need to move towards greater disclosure. I think on the discussion of the PRSP review report, as Horst said, it'll go to our Board early March. There is then a period before the Development Committee—but as soon as it's gone to the Board, it'll be made public. We've got that approval, I think, already, so that there will be ample time for you to look at it.

We may not be able to get approval for disclosure ahead of the Board's discussion, but I'd say to you that's important, but not compelling. You should have ample time, given that it's going to come to the UN meeting in Monterrey, as well, to have a period in which you can take a look at it, criticize it and discuss it before we get to the Development Committee.

But in principle, what Horst and I are both working on, is to try and see how much of the stuff that we can release upstream, so that we can get the benefits of the public discussion that you're speaking of.

On the PRSCs, we've already agreed that we're going to have poverty and social analysis, as well as impact analysis as part of the PRSCs. We don't do it as well as we can or could. We're a lot better than we were. I think it will take 3 to 6 months before we get to a level that we're satisfied with, but the commitment is there, and it will always be a part of the PRSCs. But rather than it being nominal and making it substantive, I think it's a 3- to 6-month period before we can really say that we're doing it right.

Mr. Nyamugasira: I don't know whether anyone has a burning question or a follow-up question. I think in the time available, we probably can only take one. So, Rick?

Question: Rick Rowden (Results, U.S.A.): Yes, just as a follow-up. I think that the dichotomy that the institutions use about their globalizers and anti-globalizers is not really a fair dichotomy. There are really honest, reasonable areas of disagreement on the issues, such as the proper role of the state and industrial development.

As you gentleman certainly understand from economic history, the industrialized countries themselves certainly had a profound role for the state in trade protection and in subsidy provision and other aspects as well, the same with the four tigers of Asia. These are reasonable issues that can be honestly debated.

For 20 years, the neo-liberal ideology that's informed your policy advice has been given a 20-year run. What I would suggest many of your critics and protestors are suggesting is perhaps that needs to be reconsidered.

Mr. Köhler: I would like to respond to that. In principle, I agree with you. At least it's my conviction, globalization means we have, in a way, to revitalize the state function.

This is also a kind of self-critical reflection on our own role. I, too, think, for instance, privatization is good if you compare it with, say, corruption and bad management by public institutions. But privatization without rules, guidance and, if you want, supervision function of a supervisory authority, which is committed to the public global good, doesn't really work by itself.

Therefore, and this is already in the process, we need to discuss the role of global public goods, who is in charge of that, and we need a way, a framework—I would not dare to say a world government because that's nonsense, but we need really standards and codes, rules which guide markets. But this process is underway.

We, for instance, in the Fund are working heavily, very ambitiously on what we call standards and codes for the financial sector. It is not the "catch as catch can" capitalism, but we may have been too late, a bit too slow in the '90s. And this is now in the process of revision, and I think, therefore, I said, the globalization discussion should be revitalized. You should speak up, and at the end, we have a better globalization.

Mr. Wolfensohn: Can I quickly add that it's not just civil society that's discovered the issue of the role of the state. If you look at our materials since the World Development Report we did four years ago on the role of the state, if you look at every report that we've put out since, I think you'll find a lot more coherence between our views and your views than you would admit. But I don't have 2 minutes to convince you, and my guess is that I probably couldn't, even if I had 20.

But I would say this, that I think one of the issues that we have to watch the people who may gather outside our building, is that I think that you also owe it to them, and to us, to be fully informed on what we're doing and not just put us in a box and say these are evil or ill-informed people.

I don't mind the people outside, but I do think that dialogues that are informed tend to be better than dialogues that are not informed, and that's why I welcome these last few days.

Mr. Nyamugasira: Thank you very much.

I don't know whether I'm hearing this correctly from the distinguished panelists, if you like, that you are basically declaring that it's no longer business as usual, that we can take your word on that, and, therefore, monitor the trends that demonstrate to us down the road that it, indeed, hasn't been business as usual.

I'm also hearing from Mr. Köhler's opening remarks that there is some discussion that is going on with his staff, and that we should, therefore, expect that that may take a little while. But I also wish to hear how soon or whether these same messages that you graciously communicated to us here are also being sent to our countries that, indeed, they do have the right to choose from a range of options on how fast to go on privatization, for example, and things like that. Because then we will be looking for this, as I said, in staff missions, when they go out, in governments, and then stop blaming you for things that we should be blaming someone else.

Mr. Wolfensohn: I think that's a great idea.

Mr. Nyamugasira: We also are hearing very clearly that you are in favor of more information disclosure. Again, we can be monitoring to see the trends that illustrate that.

I thought we should close with a note for civil society that maybe we should also be considering a staff exchange program. Because we are changing a culture, and really we ought to have some of your staff, in this whole process of changing culture and behavior, come down and work with us in civil society, and maybe a few of us come to you. This is something quite important. I'm saying it humorously, but it is something that we should see more happening. I'm hearing you saying you do it already.

Mr. Wolfensohn: We do it already.

Mr. Nyamugasira: So we welcome these remarks and hope to see that this is now setting a trend. It was very important both of you came. It's very important both of you are essentially giving us the same message, except I think on one or two points where there was silence on the right side (Mr. Köhler), but I'm sure that's because you agreed entirely with what the left said (Mr. Wolfensohn).

Mr. Nyamugasira: We thank you very much.

Mr. Wolfensohn: If you would leave your names at the door, we'll be glad to collect them for staff exchange. Mr. Köhler, I know, would like to come work with you and so would I.


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